The IPE of Global Tax Governance

Abstract

Taxation binds the state together with its citizens, and with other economic actors operating within its borders. The growth of cross-border capital flows and global corporations has complicated these taxing relationships, creating opportunities for competition and cooperation between states. ‘Double taxation’ occurs when two or more states disagree over who has the right to tax cross-border investment. At the same time, states can no longer fully enforce their tax laws over transnational capital without cooperating with each other. Finally, states have an incentive to compete for investors by offering them preferential tax treatment, including by shielding them from cooperation. To resolve these issues, a complex of binding bilateral agreements among states and multilateral soft law, in which the OECD plays the leading role, has developed over a century. The persistence of tax avoidance and evasion, which burst into the public and political consciousness following the financial crisis in recent years, has created a crisis of legitimacy for the OECD, whose membership is limited to wealthy capitalist states. This chapter discusses how IPE scholars have examined these stresses and strains in a century-old regime from three perspectives: state-centric, constructivist and critical.